Obama takes aim at predatory lenders

Barack Obama, making a rare hometown public appearance and fleshing out his economic agenda, detailed plans Wednesday to protect consumers from predatory lenders.

While focusing on credit card companies, the Democratic presidential nominee painted a broader campaign theme: That his election would level the playing field on which the working class and corporate America interact.

Obama used a roundtable discussion with three Illinoisans mired in credit card debt to promote a series of proposed limits on lenders.

More Coverage Video Obama calls for tighter credit card restrictions

He blasted John McCain, saying his GOP opponent has sided with lenders on votes that would have offered protections Obama favors.

Obama proposed a five-star rating system, in which the federal government would examine lenders' policies and then assign a rating -- with five-stars going to credit card firms offering the most consumer-friendly terms.

The Illinois senator said that while some consumers suffer deepening credit card debt because of irresponsible choices, most get buried in a maze of fine print, deceptive practices and escalating fees.

Criticizing card agreements that run to 30 pages, Obama said interest rates should be as clear to borrowers as EPA mileage figures displayed on new-car price stickers.

"Otherwise the salesman could sell you that Hummer and tell you you're going to get 30 miles per gallon," Obama said. "But because of federal law, you get that information in a clear, concise way."

He called for additional credit-card rules, including:

bull; A ban on unilaterally raising interest rates on money already borrowed.

bull; Prohibiting interest charges on late fees.

bull; Prohibiting "universal defaults," in which a lender raises the interest rate on a borrower who is late paying cards issued by other lenders.

Even with these restrictions in place, credit card firms would make a fair profit, Obama said.

He said consumers carrying heavy credit card debt face additional problems because of 2005 federal law changes making it more difficult to file for bankruptcy.

"I fought this bill hard," Obama said. "But ultimately it passed. John McCain was strongly supportive of this bill."

Speaking of broader consumer anxiety, Obama said, "The underlying problem is not that people are being irresponsible in buying a bunch of stuff they don't need. The problem is that with rising gas prices, rising food prices #8230; what you've got is a mismatch between what people are making and what they need just to survive. That gap is basically being filled with debt."

Obama said his administration would begin to reverse that by granting tax cuts to 95 percent of Americans and closing corporate tax loopholes.

Wednesday's event, in front of small invited audience and reporters, was part of Obama's two-week tour on economic issues.

The session originally was scheduled for Iowa, a November battleground state. He moved it to the Illinois Institute of Technology because of flooding in the Hawkeye state.

Neither McCain's campaign nor the American Bankers Association returned calls seeking comment Wednesday.